“Google’s ambitious push to build superfast networks in specific cities, may seem like just another wild idea to come out of the Silicon Valley giant,” Benjamin Pimentel reports for MarketWatch.

“But Google Fiber, as the initiative is called, may just turn out to be a smart long-term business idea, one that poses a serious threat to traditional telephone and cable companies, a Bernstein analyst said Tuesday,” Pimentel reports. “In fact, analyst Carlos Kirjner argues, ‘Our analysis suggests that long-term investors in cable and telephone companies should at least seriously consider the possibility of ‘the frog slowly being boiled,” he wrote.”

Pimentel reports, “Kirjner stresses that Google Fiber poses ‘limited’ short-term threat to the established phone and cable companies. But the long-term risks are clear, he argued.”

Verizon (a telco) already has fiber … they call it FIOS … and what’s stopping it from being adopted by consumers is that Verizon’s asking price (monthly fees) is more than most consumers are willing to spend … ie, they set the price too high.

FWIW, part of their self-serving business strategy is the “Triple Play” routine of bundled services, where the consumer is herded by price structure to rationalize getting ( Bandwidth + Phone + TV ), because they’ve set the price for Bandwidth only artificially high.

FYI – as an example, I just checked my local Telco (Verizon) for their FIOS prices. To sidestep their first year lowballing nonsense, these are all their ‘No Contract’ rates, per month, before local taxes & fees:

$75 – 15/5
$70 – 15/5 + TV
$75 – 15/5 + Phone
$80 – 15/5 + TV + Phone

Yes, you read that first two lines correctly: they charge LESS if you add their basic TV package than just their 15/5 bandwidth service. Of course, there’s probably more taxes/fees if you have TV, so the net result will probably be a wash.

How much will it cost Verizon to upgrade that 50′ of coax compared to Google’s cost of establishing a local presence (installation, sales), acquiring right-of-way, running fiber around your city and advertising for customers?

The correct answer to that question explains why Google Fiber is not going to accomplish what the title of the article threatens.

As with any complex businesses (complicated technology, logistics, business partners, operation, etc.), there is a learning curve when doing something new.

By the time a new competitor develops a lot of experience it can be very difficult for old competitors to make the turn. They are held back by the momentum of old practices, culture, business contracts, etc., even when it would appear to outsiders that they should be able to catch up again easily.

I suspect Google is doing a lot more than just running some fiber. They are figuring out what kinds of local resources, servers, caching, and other technology best matches the increased bandwidth. They are probably also exploring what new kinds of consumer and business services they could provide on top that speed that existing telecom providers are not. Given Google’s unique advantages (huge amounts of data and expertise in creating value with it), traditional telecom ought to be very worried that they are taking the time to experiment with their turf.

Of course they could. But that would also force them to invest in upgrading infrastructure as opposed to simply lining their pockets with profits. They’re also gouging consumers, providing much less service at a higher price than in other countries. Google Fiber has huge potential to be a disruptive force, specially to a company like Comcast which holds a monopoly in 22 of the 25 largest US cities.

The best answer is cost. The analyst never talked about how long it will take to payback the money Google is spending. Gonna be way more than people expect. Both AT&T and Verizon had similar plans a few years ago. Now they found out that people are not go to pay a premium and then it was time to phase out future plans for expansion. Internet is only as fast as then slowest link in the chain. Some sites might only have T-1 or less connections. Paying lots of money for last mile speed does not always work out.

If Google Fiber ever does threaten them, it will be far easier for AT&T and Verizon to upgrade their systems than for Google to build a nationwide network from scratch. The incumbents already have right-of-way, workers in the local market, long-term customers on contracts, offices, retail stores, local politicians enlisted in their cause, etc.

Just another pipe dream from the smart, rich, immature boys who run Google.

Given how the telco’s and CATV companies have held prices quite high for years/decades … cash cows for them … they’ve set themselves up for being disrupted – – all it takes is a competitor with deep enough pockets to deploy a network, which can be aided by contract agreements that we keep on hearing rumblings about such as Al le Carte TV channel subscriptions via the Apple TV…

The cable companies and Telcos have been running their business in a way that is counter to the interests of their customers and their business is ripe for being disrupted.

I’ve argued for some time that Apple should be the ones disrupting them as at the moment the pipe is the weak link. Apple need the co-operation of service providers to incorporate features like visual voice mail ( does your supplier offer it after all these years ? Many still don’t ). The fees charged by ISPs and cable companies are far too high and the contracts are unreasonable.

Google is going about it in a piecemeal way. What is needed is not an optical cable network in selected big cities, but a truly global system so that a customer can buy into the service and still use it when they travel elsewhere in the world. Few companies could contemplate such a challenge. Apple is such a company and has the vision to understand the long-term benefits.

As you said. The misery quotient of Cable subscriberdom already matches the suffering index of the Wintel gulag, yet neither seems as horrific as the skin-crawling prospect of a vertically integrated Google.

Google is the closest equivalent to evil we have business-wise on earth. But, if this lowers the ridiculous pricing of broadband seen nationwide in the states, I’m all for Google Fiber. Competition will be forced to lower prices in order to compete. Something like this has been much needed… I was hoping Apple would do this instead.

I concur, bpondo. This would be a leap past existing Google service data mining. Every single bit flowing into and out of your home would go through a Google server running Google data parsing and ad delivery software. 1984 meets 2013.

I just don’t think wire is the future. Yes, a fortune has been spent in fibre optic installations but you know what? Fast as it is, I just don’t want to see that white wire or see the router anymore. Cheap, hard to steal wireless is the future. The speed is coming. Oh, if only wireless cloud computing is what Apple will announce at the WWDC. If only Apple could free me from 3G and 4G networks. I just want fast wireless everywhere in the world or deliver everything via satellite. You can do that, too.

Google may be able to take high speed internet services, but it will never challenge the cable providers for entertainment services. Google can’t get the deals for carrying all the TV networks and channels like Verizon, Time Warner, Cox, etc. can achieve.